Government Housing Tax Credits – Friend or Foe?
According to an article in Yahoo Finance, part of which is quoted below, I have to wonder what the heck is going to happen after the extension of the tax credit expires.
The myriad of government programs in the housing sector has obviously helped the housing market, at least in some areas. After all national sales are up 21% from December 2008.
“Sales of previously occupied homes took the largest monthly drop in more than 40 years last month, sinking more dramatically than expected after lawmakers gave buyers additional time to use a tax credit.
December’s sales fell 16.7 percent to a seasonally adjusted annual rate of 5.45 million, from an unchanged pace of 6.54 million in November, the National Association of Realtors said Monday. Sales had been expected to fall by about 10 percent, according to economists surveyed by Thomson Reuters.
…
Though the results missed Wall Street’s expectations, the Realtors’ group says there are signs the market is finally stabilizing.
Despite fears that home prices are starting to fall again, some analysts still believe the worst is over.” Source: http://finance.yahoo.com/news/December-home-sales-down-apf-2729493334.html?x=0&.v=6
I find the last couple of sentences in the above quote most interesting. With record low interest rates and housing affordability index – 2 prime indicators of rebounding housing market – the prices of homes are still falling! Also, in the past, record high unemployment has meant low record house prices, yet with super high unemployment levels, why did house prices rise. It just doesn’t make sense.
It really makes me wonder what is going to happen over the next 12 – 24 months?
Just Let It Be!
I think that what the government has done is quite enough now. It is time for the housing market to recover naturally, own its own. That may mean that it gets a lot worse before it gets better. But, at least we’re not delaying the inevitable.
For real estate investors, this is a very interesting time… time of caution as well as unprecedented opportunity.
Very valid, pithy, sccunict, and on point. WD.